Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 1 - Trading Introduction
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 2 - Financial Products
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 3 - Economic Principles
1 of 2


Fundamentals are used by an analyst to determine what they believe to be the value of a security. A security in this context could be a specific market, product, exchange rate or an individual stock etc. Fundamentalists will therefore assess the following when considering possible opportunities for profit potential:

  • Liquidity
  • Asset quality
  • Earning quality
  • Leverage
  • Debt service coverage
  • Profitability
  • Growth
  • Potential problems and opportunities for improvement

Governments, Central Banks and Economists are a small group of the numerous market participants that use fundamental analysis for a broad spectrum of reasons. Economic data that is released has national and international consequences depending on the economies they are being linked to.

America being the largest economy in the world can have a big impact on many markets worldwide, and various economic figures send ‘ripples’ across the financial world when they are released. In your quest to be a successful trader it is important to distinguish that most technicians have an awareness of fundamentals, and most fundamentalists are familiar with charting techniques. There are of course, some members of both camps who proudly claim not to be influenced by the consideration of the other.

The problem is that often charts and fundamentals are in conflict. Conflicts tend to occur at the beginning of major market moves. Despite the arguments that either fundamental or technical analysis have better results it is important to remember that any knowledge given to trading markets is good knowledge and both techniques should be used and understood to improve your level of being a well-balanced trader who recognises great opportunities to make money.

Scroll to Top